Element Fleet Management Corporation · TSX:EFN
Element Fleet Management — Investor Presentation (October 2018)
25 slides from Element Fleet Management's investor presentation, Oct 1, 2018
Slide 1: A new path forward
A new path forward OCTOBER 1, 2018 A final base shelf prospectus and the documents incorporated by reference therein containing important information relating to the securities described in this document have been filed with the securities regulatory authorities in each of the provinces of Canada. A
Slide 2: Forward-looking statements
Forward-looking statements This presentation contains certain forward-looking statements and forward-looking information regarding Element and its business which are based upon Element’s current expectations, estimates, projections, assumptions and beliefs. In some cases, words such as “plan”, “expe
Slide 3: Disclaimer
Disclaimer An investment in the securities of Element involves significant risks. A discussion of some of the material risks affecting Element and its business appears under the heading “Risk Factors” in Element’s Annual Information Form dated March 28, 2018, under the headings “Risk Management” and
Slide 4: Proven new management and a revitalized, majority independent board
Proven new management and a revitalized, majority independent board Jay Forbes Vito Culmone Chief Executive Officer Chief Financial Officer • CEO effective June 1, 2018 • CFO of Element effective July 16, 2018 A reconstituted • A fresh strategic perspective for Element • Seasoned financial executive
Slide 5: Strategic path forward
Strategic path forward A customer-centric reset of the business that is expected to create lasting value for shareholders and “In a very short time, Element positions the company for growth has become a market leader in the fleet leasing and services industry. While the company • Element is a global
Slide 6: Rapid expansion has resulted in growing pains
Rapid expansion has resulted in growing pains Separation of EFN and Back-to-back transactions consumed previous ECN with EFN retaining management’s focus the Fleet business and • Poorly executed integration process led to fleet-like assets deteriorated customer experience and a high internal cost st
Slide 7: Strategy summary
Strategy summary Transform Element's business Reposition 19th Capital Strengthen the balance sheet • Refocusing resources on creating a superior • Over its short history, 19th Capital has • The profitability (and associated cash flow) customer experience that can be delivered with meaningfully under
Slide 8: Transform Element's business
Transform The strategic plan Element’s business
Slide 9: A customer-centric strategy that drives significant shareholder value
A customer-centric strategy that drives significant shareholder value Simplify how we work internally • Org simplification Build/strengthen value proposition for • Increased automation Simplify operations and customer mid market touchpoint process • Develop segment-specific products • Operations rat
Slide 10: The Reset Plan: Three waves of transformative change
The Reset Plan: Three waves of transformative change Impact Best-served customers Building for Motivated the Future & top talent Back Anticipated to Basics Reinvest in the earnings business, evolve our improvement model, accelerate Quick Transform our growth and continue processes and Wins infrastru
Slide 11: The reset has begun: ~$100M of value delivery expected by 2019
The reset has begun: ~$100M of value delivery expected by 2019 2018 2019 2020 Quick Wins Back to Basics Building the Future Anticipated annual run- rate op profit ~$40M ~$100M ~$150M (pre-tax) 50+ small projects 25+ initiatives 5-10 initiatives • Delayering to get • Improvement of customer service d
Slide 12: Benefits will be de-risked and expedited through crisp execution and rigorous tracking
Benefits will be de-risked and expedited through crisp execution and rigorous tracking Past Challenges New Enablers • Lack of focus / accountability • Focus on what matters • Leadership capacity • Transformation • Management capability Management Office (TMO) • Misaligned incentives • Organization r
Slide 13: Our end objective is to truly transform all aspects of our business
Our end objective is to truly transform all aspects of our business From… To… Trying to be everything to everyone Delivering our core promise to the customer Individualistic culture with limited collaboration A culture of accountability and clarity A dispersed, regional structure A unified, customer
Slide 14: Reposition 19th Capital
Reposition 19 th The strategic plan Capital
Slide 15: Re-position 19th Capital
Re-position 19th Capital Engaged in a detailed assessment of the joint venture and determined preferred option: acquire and run off the assets of 19th Capital History Strategic assessment Preferred resolution Joint venture was an attempt to Management’s assessment of Buy out partners' interests and
Slide 16: Our plan for 19th Capital is designed to minimize risk
Our plan for 19th Capital is designed to minimize risk as we pursue an orderly run off of the business Element will take full ownership of 19th Capital to assert control and to consolidate the assets on our 1 balance sheet • Removes partner facing significant issues and distractions within its own b
Slide 17: Strengthen the balance sheet
Strengthen The strategicthe plan balance sheet
Slide 18: Strengthen the balance sheet
Strengthen the balance sheet Element will strengthen the balance sheet by maintaining a strong investment-grade capital structure and addressing its near-term maturities Additional equity capital 2019 convertible debenture • $300M common share offering to • $345M convertible debenture matures in rec
Slide 19: Strengthen the balance sheet cont'd
Strengthen the balance sheet cont’d Reducing the dividend will strengthen Element’s capital position, fund the transformation plan and allow for further investment in growth initiatives Dividend reduction Initiation of DRIP program • 40% reduction in the annual dividend • DRIP discount of 2% (from $
Slide 20: The strategic plan Summary
The strategic plan Summary
Slide 21: We are already delivering
We are already delivering Built a well-balanced leadership team mixing new talent and extensive experience in our business • Jim Halliday, COO (15 years at Element and PHH in leadership roles) • Vito Culmone, CFO (formerly at Shaw and WestJet) • Jon Parker, EVP Enterprise Sales (joined Element from
Slide 22: Key components of reset
Key components of reset • While program is front-loaded, clear decisions made to avoid growth 1 Staged execution and futuristic initiatives that would require additional capabilities and detract focus from core • Unlike integration, execution plan is comprised of several 2 Collection of smaller proj
Slide 23: Financial outlook
Financial outlook Consolidated after-tax adjusted operating income per share $1.00 $0.90 to $0.95 $0.86 $0.75 2016 2017 LTM 2020E LTM as of June 30, 2018 Note: 2020 estimate are on a currency neutral basis Element is expected to generate after-tax adjusted operating income per share of $0.90 to $0.9
Slide 24: Our promise: Be realistic, transparent and accountable
Our promise: Be realistic, transparent and accountable Realistic goals Transparent Clear accountability communication through implementation Realistic path to of a management report achieve them Transparent reporting card Watch what we do. You will see proof in the actions we take. We will constantl
Slide 25: Element investment highlights
1 A leading global fleet management company 2 Customer-centric strategy driven by a full-service, technology-enabled model Element Diversified across different revenue investment 3 streams, client types, geographies and funding sources highlights 4 Accountable new management with proven ability to d
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